FTSE shares have been on a tear, with the FTSE All-Share up roughly 33% over the last two years. As a result, many UK stocks now look expensive on traditional valuation measures like price-to-earnings (P/E) ratio.

That sort of rally often sets the stage for a sharp pullback. For patient investors, such a market wobble can provide a once-in-a-decade opportunity to buy some quality shares at bargain prices.

So which UK companies look overvalued right now?

A stock I’ve got my eye on

One standout business that fits this narrative is Halma (LSE: HLMA), the safety, health and environmental technology group listed in London. Described as a portfolio of life‑saving technology companies, it’s been growing steadily for decades.

Essentially, it’s a collection of specialist businesses that make a range of products including fire detection systems, healthcare diagnostic tools and environmental monitoring kits. With broad international reach, it serves customers across the UK, US, Europe and the Asia-Pacific region.

Financially, it looks in excellent shape. In the year to 31 March 2025, it delivered record revenue of about £2.25bn, up around 10.52% year on year. It also booked record profit, marking 22 consecutive years of near-unbroken earnings growth.

The group’s adjusted operating margin sits in the low‑20s and cash generation is strong. Critically, returns on invested capital (ROIC) are in the mid‑teens — all signs of a high‑quality, capital‑efficient business.

Can it keep growing?

Looking at recent figures, Halma’s performance is undeniably impressive. Revenue’s up 11.74% year on year and earnings jumped 21%. Return on equity (ROE) of 18.6% indicates that it’s turning shareholder capital into profit very effectively, which is exactly what long‑term investors like to see.

The balance sheet also looks solid, with net debt to EBITDA below one. This gives management plenty of room to keep investing in research and development, acquisitions and a growing dividend. In fact, Halma’s grown its dividend for more than 40 consecutive years by at least 5% annually, which is a rare record even by FTSE standards.

But how’s the valuation?

Up more than 40% over the past year, Halma shares now trade on an eye-wateringly-high forward P/E ratio of 35. On top of that, the price‑to‑book (P/B) ratio is 7.5 and P/E‑to‑growth (PEG) ratio 2.02.

Those are all rich multiples, suggesting future success is largerly priced in. If results disappoint, the price could take a sharp dive. That’s why buying at the current price isn’t attractive — but a brief market dip could make all the difference.

Final thoughts

Market dips can be scary but smart investors recognise the opportunties they offer. However, even at a lower price, Halma isn’t without risk. Since it relies on making frequent acquisitions to supplement organic growth, overpaying for deals or struggling to integrate them could drag on returns.

Still, as a highly-established market leader with consistent demand, it’s just the kind of quality stock that seldom sells cheap. For UK investors keen to grab a slice of this pie at decade-low prices, it’s worth considering if the market dips.

But that’s not the only high-quality FTSE share I’ve had my eye on recently…